Target: ₹390
CMP: ₹317.95
Incorporated in 2016, IKIO Lightning is an Indian manufacturer of light emitting diode (LED) lighting solutions. They are focused on sustainability and providing low energy LED products to help India meet its sustainability goals.
IKIO Lighting’s Revenue/EBITDA increased by 18/27 per cent CAGR from FY20 to FY23 on account of healthy product mix, operational efficiency and brand visibility. Over the years, company has strengthened its financial position through strong customers base and repeat orders, Post listing, company has repaid its borrowings which has enabled them to be a debt free entity and lower its working capital requirements in FY23.
Despite Covid-19 pandemic and uncertainty, company has shown improvement in performance. EBITDA margin has increased from 17 per cent to 22 per cent from FY20 to FY23 which shows its resilience and competitive edge over its peer group.
Going ahead, company plans to make surplus investment towards capacity expansion, new product lines, backward integration. In addition, they are building an international customer base, primarily in the US.
We believe that IKIO’s Revenue/EBITDA/PAT is expected to grow at a CAGR of 22/27/29 per cent respectively over FY23-25. We initiate the coverage with a “Buy” rating by assigning 36x of FY25 earnings.